French President Nicolas Sarkozy has aruged that the EU should not be naive on trade and investment and should demand reciprocal rights for its own firms. EU officials are debating whether to make access to lucrative EU public works contracts conditional on reciprocal openings by countries such as China, India and Russia.

EU industry was rattled last year when Chinese firm Xinmao beat all EU offers for Dutch cable maker Draka, prompting fears that the bid — and others in Europe’s high-tech sector — might be backed by state funds.

Although Xinmao eventually withdrew its offer, the incident highlighted Europe’s diverging approaches to foreign investment.

An EU committee could forge a single approach and integrate existing EU rules on general and energy-related acquisitions, Tajani and Barnier’s letter says, according to sources.

EU officials confirm Barroso received the letter and say it will be discussed later this month. But trade experts see it as a dangerous precedent that could be protectionist.

A British government source told Reuters that London would oppose tighter controls, and retailers are also sceptical.

“The idea of assessing investment is a dangerous premise because investment is a market phenomenon,” said Jacques Pelkmans, director of economics at the College of Europe in Bruges. “A marginal check may be necessary if a sovereign wealth fund that’s not transparent or that’s politically motivated invests in sensitive areas. But overall I would have to see a good, serious proposal giving evidence why this is necessary.”